EIOPA Publishes Update On Bermuda Solvency II Equivalency

The European Insurance and Occupational Pensions Authority on September 4 published an updated progress report regarding Bermuda's Solvency II equivalence assessment.

The EIOPA's assessments concern whether solvency regimes applied to reinsurance activities by third countries, such as Bermuda, are equivalent to that laid down in the EU Solvency II Directive.

A finding of equivalence for reinsurance supervision means that reinsurance contracts between EU insurers and third country reinsurers are treated in the same manner as those concluded with EU reinsurers. In particular, member states cannot require pledging of assets to cover unearned premiums and outstanding claims provisions in relation to such reinsurance contracts.

In March 2015, EIOPA provided the European Commission with additional advice regarding the full equivalence assessment under Solvency II of the insurance supervisory regime in Bermuda. Since that advice, Bermuda has made substantial amendments to the regulations applicable to (re)insurers, and consequently the European Commission considered that a further progress report was necessary for it to take fully informed equivalence decisions later this year. The new progress report describes the latest developments on the basis of material provided by the Bermuda Monetary Authority.

The Bermuda Monetary Authority said the updated report takes into account substantial amendments to the regulations applicable to commercial (re)insurers introduced by the Bermuda Monetary Authority since EIOPA's last report was published in March 2015. The European Commission considered that a further progress report was necessary in order for it to take fully informed equivalence decisions later this year.

Jeremy Cox, Chief Executive Officer of the Authority, said: "We welcome the published update and commend EIOPA for its efforts during a very busy time. We particularly wish to thank EIOPA's equivalence committee, chaired by Mr. Edward Forshaw, who has had to conduct a very rigorous review. This takes time, discipline, patience, and a willingness to challenge, all with a view to achieving a jurisdictional assessment that fairly represents the inner workings of the third-country supervisor – in this case the Authority."

"Tremendous work has been achieved by the Authority's equivalence-focused team, however, I also wish to thank representatives from industry who assisted the Authority in charting an appropriate course for Bermuda by providing timely and meaningful feedback. Bermuda is a jurisdiction that believes in high standards of regulation and supervision, but also believes the best way to achieve this is to ensure that the markets to which that regulation and supervision will be applied, are given ample opportunity to comment on any proposed regime changes."

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